Is the Commercial and Office Real Estate Market Reviving? Transaction Volume Surpasses 100,000 for the First Time in 3 Years

[Asia Economy Reporter Ryu Tae-min] The commercial and office real estate market, which had frozen due to the impact of COVID-19, is recently showing signs of recovery. The transaction volume in the third quarter of this year surpassed 100,000 units for the first time in over three years.

On the 6th, Real Today, a real estate research firm, reviewed real estate statistics from the Korea Real Estate Board and found that the nationwide commercial and office real estate transaction volume in the third quarter of this year reached 100,412 units, exceeding the first quarter (86,335 units) and second quarter (95,000 units) volumes.

This is the first time in over three years since the first quarter of 2018 (101,541 units) that the transaction volume in the commercial and office real estate market has surpassed 100,000 units.

The investment yield on commercial real estate is also on the rise. According to the Korea Real Estate Board's real estate statistics, the nationwide commercial real estate investment yield recorded increases of 1.27 percentage points (p) and 1.15 p in the second and third quarters of last year, during the height of the COVID-19 pandemic. In the second quarter of this year, when vaccination began in earnest, it rose to 1.78 p, showing an upward trend, and although it slightly dropped to 1.61 p in the third quarter, it remained higher than last year.

This is interpreted as demand shifting from residential products such as small apartments or officetels, which received monthly rent, to commercial and office real estate due to the government's successive high-intensity housing regulations. Commercial and office real estate is freer to resell compared to apartments, is not included in the number of houses, and thus is excluded from multi-homeowner-related taxation. Loans are also relatively easier to obtain.

Along with this, there are places where ownership changes among building owners have occurred due to COVID-19, and as vaccination rates increase, more investors are securing positions in preparation for phased daily recovery (With COVID-19).

A Real Today official explained, "As the With COVID-19 sentiment expands, the income-generating real estate market such as commercial buildings is likely to revive in the real estate market," adding, "While apartment prices soared to the sky, the prices of commercial and office real estate remained the same, so there is a strong perception that they were undervalued."

This content was produced with the assistance of AI translation services.